As we step into 2025 and embrace the Year of the Snake, many of you may be gearing up to make your first move in the stock market.
Maybe you’ve received a generous bonus or saved up a nice chunk of money, ready to invest in stocks and start growing your wealth.
The good news? You’ve already taken the most important step in what could be a rewarding financial journey.
Investing in shares is one of the most powerful ways to build wealth and create a source of passive income.
It was nearly 20 years ago when I made my first investment, purchasing shares in the initial public offering of Suntec REIT (SGX: T82U).
Looking back over my two decades of investing, I’ve learned a lot – and I want to share four key lessons that I wish I had known when I first started.
These insights could have made a big difference when I was just beginning, and I hope they’ll guide you as you work to grow your money for retirement.
Volatility is part and parcel of investing
If you think stocks will rise smoothly based on business results, you will be in for a surprise.
Volatility, defined as sharp, unpredictable swings in stock prices, is a natural part of the market.
Events such as business news, corporate announcements, and earnings reports can move stock prices, but there’s often no clear reason for a stock to jump or drop on any given day.
Take OCBC Ltd (SGX: O39), Singapore’s second-largest bank, for example.
Back in January 2019, OCBC shares were priced at S$11.38. By the time the pandemic hit a year later, they had fallen more than 30% to S$7.81. Yet, just five years later, those same shares have more than doubled to S$17.09.
For new investors, this kind of volatility can be unsettling as they watch their hard-earned money rise and fall from one year to the next.
But instead of fearing it, try to view volatility as an opportunity.
Investor sentiment often drives short-term price swings, but when you focus on the company behind the stock, you’ll realise that volatility can be a chance to buy quality businesses at a discount when others are selling in fear.
Strong companies with solid fundamentals occasionally experience price drops for no real reason, and this creates an opportunity for you to buy in at a lower price.
Once you accept that volatility is part of the investing landscape, you can use it to your advantage instead of being intimidated by it.
Learn through theory but hone with practice
When I first started investing, I was a voracious reader. I kicked things off with basic investment books like Peter Lynch’s “One Up on Wall Street”.
As I progressed, I dove into value investing with books like “The Intelligent Investor” by Benjamin Graham and “The Warren Buffett Way” by Robert Hagstrom.
Reading is a great way to get familiar with the ins and outs of investing and build your foundation.
As I devoured book after book, I began to feel pretty confident in my knowledge.
At least, that was until I branched out and started buying stocks beyond Suntec REIT.
Looking back, I realise my overconfidence got the better of me.
All the reading did not fully prepare me for the emotions that come with actual investing.
Despite having absorbed a lot of knowledge from those books, I still made mistakes buying the wrong stocks.
What I quickly learned was that the books hadn’t equipped me with the emotional resilience needed for investing, nor had they taught me how to dive into the kind of detailed research required for making smarter decisions.
It’s like reading a book about riding a bicycle, but never actually getting on one.
So, here’s my advice: start by reading to build your investment knowledge, but complement that with hands-on experience by investing real money.
This approach allows you to sharpen your real-world skills, manage your emotions, and apply what you’ve learned to analyse actual companies.
It’s a powerful combination that will help you grow and improve as an investor over time.
Don’t beat yourself up over mistakes
I’ve always had a bit of a perfectionist streak, and I really don’t like making mistakes.
When I first started investing, I quickly realised I was making all sorts of errors.
These missteps left me feeling defeated and close to giving up on investing altogether.
Back then, no one told me that mistakes are actually a normal part of the investment process – and that it’s important not to beat yourself up over them.
In fact, making mistakes early on, when your capital is still small, is a good thing. It means the financial damage is minimal.
As your portfolio grows, though, mistakes can become more costly.
That’s why it’s crucial to learn from them.
One useful tip is to keep a journal of your mistakes. It’ll help you remember those tough lessons and prevent you from making the same errors again.
Even better, try to learn from others’ mistakes. Talking to more experienced investors can give you valuable insights and help you avoid pitfalls along the way.
Give yourself time to learn and grow
Patience is one of the most important traits beginner investors should develop.
When I was just starting out, I was eager to absorb as much as I could in the shortest time possible, hoping that would lead to quick rewards.
Looking back, I realise I should have taken a more measured approach – focusing on truly learning instead of rushing to gather information.
It’s important not to rush the process of getting rich. Instead, take your time to understand the stocks you invest in and how they fit into your strategy.
Investing is a journey of continuous learning, where you gradually build the skills needed to navigate the stock market with confidence.
These skills are crucial, especially when you face challenging macroeconomic conditions or when unexpected events affect the companies in your portfolio.
There’s no shame in taking your time to build wealth – just look at Warren Buffett, one of the world’s most successful investors. His slow and steady approach is a big part of his success.
As you gain experience, you’ll develop a “circle of competence” – an area where your knowledge is strongest.
For example, an engineer might have a better understanding of engineering stocks, while someone in the pharmaceutical field will likely have a deeper insight into the medical industry.
Over time, you can expand that circle by learning about new companies, sectors, and market trends.
This will not only make you a more well-rounded investor but also help you diversify your portfolio and spot new opportunities.
Get Smart: An interesting and rewarding journey
Starting out in investing can feel intimidating, but the great news is that you’ve already taken the most important step by getting started.
Now, all that’s left is to stay focused, keep learning, and sharpen your skills along the way.
If you stick with it, I promise you’ll be handsomely rewarded for your efforts.
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Disclosure: Royston Yang owns shares of Suntec REIT.
